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The Wage Debate
The Immorality of a $15 Minimum
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  • Jim__L

    Reich is a high priest of the clerisy, the top 10%, who can’t imagine life to be worth living (or jobs to be worth doing) if they’re not the high-paying “creative” jobs the clerisy are raised to expect as the entitlement of all humans who go to university.

    They view economic hardship and physical toil with blind terror mixed with contempt, and some (like Reich) spend their lives tinkering with social engineering systems to try to keep that terror at bay. (The more youth-obsessed among them also see bearing and raising a family with the same terror of the uncomfortable and unknown.)

    The rise of these philosopher-kings, separated, insulated, and raised above their fellow “lesser” human beings from the beginnings of adulthood (and earlier) by segregation into university, correlates to the decline of institutions that mix them with the rest of the population on a basis of equality. Compulsory military service, church, even the Boy Scouts, are on the decline — even, deliberately targeted by the clerisy, as being outmoded and immoral — a threat to their imposing their own morality on the masses. The co-optation and domination of these institutions by the Obama administration is a power play, pure and simple, but as a practical matter serves only to make the polarization of the country more extreme.

    This will not end well.

    • lhfry

      The attack on all sources of authority and support (church, scouts, family) is the left’s long game. As the writer points out, these institutions are a threat to their aims. Anne Applebaum’s book, Iron Curtain, lays out the way in which the Soviets imposed totalitarianism on conquered eastern Europe. They focused on undermining church, civic organizations such as scouts, ethnic societies, charitable organizations, and family structure. Should be required reading. Especially now that the mask has dropped and the Democrats are openly advocating socialism.

  • jeburke

    You’d think that Reich is talking about some tiny number of low-wage workers who would lose out. According to the National Employment Law Project, 42% of American hourly workers earn less than $15 an hour, including 54% of African American workers and a whopping 60% of Hispanics (and doubtless, many salaried employees and free lancers make less than the equivalent). That’s A LOT OF JOBS! Of course, Reich blithely assumes that most employers will just pay up so job losses will be minimal, which means he has not been paying attention to the last 50 years of automation.

    • Jim__L

      Data I’d like to see —

      – For each employer, (
      – For each employee making less than $15/hr, (
      – Take the difference between the employee’s actual rate and $15/hr
      – Multiply it by their hours
      – Keep a running tally of that amount )
      – Compare that total amount to the company’s total profits
      – Show if that would push the company below some threshold of profitability )
      – For each employer that would go below some threshold of profitability because of this hike, (
      – Calculate the layoffs necessary to return to a threshold-profitable state
      – Keep a running tally of those layoffs )
      – For each employer (
      – Recalculate its price / earnings ratio
      – Recalculate its stock price )

      Output:
      – Show how many total layoffs this policy would cause
      – Show how big a hit the stock market would take

      For extra credit, determine which employers could not continue to operate after those layoffs. Add the bankruptcy of those companies to both the layoff total and the stock market hit.

    • seattleoutcast

      I wonder why the knee-jerk reaction to wages when those on the left should really be addressing the cost of living. If the costs of health care, food, energy, education and housing were reduced, one’s salary wouldn’t be that great of an issue.

      Unfortunately, those on the left push regulations that raise all of the above sectors of the economy. Seattle has ridiculous regulations that raise home prices such as semi-permeable driveways, cisterns for gutter water, etc, ad nauseum. These raise the cost of living. But since these regulations are done in the name of the environment, they are not seen as adding to the cost of living. However, poor and middle class people suffer by paying higher rents and home prices.

      Gasoline is more expensive because cities push for their own mix of fuels. Food costs are raised because of agricultural regulations, education prices rise because of excessive subsidies (that go straight to the educational system) and also because of more regulations from Washington that cause higher administration costs on the university. And health care? Obamacare has generally raised the cost of health care, not lowered it — as WRM has shown. Have you missed his posts?

      Frankly, your reply is just the typical fodder I’ve heard for the past twenty five years. You might as well say “it’s for the children!” then you can be one complete cliche.

  • Anthony

    Two thoughts: TAI has been here before (recently) and since 1980 income inequality has exploded in the United States. Additionally Secretary Reich latest piece aside, a more pertinent policy concern ought to be “dynamic of the Capital/Income ratio” – real inequality of Labor income; an income (and not relegated to low end U.S. workers per se of any ethnicity) of which minimum wage talk is but a subset baseline variable (sans assumed hypotheses: a workers wage is equal to his marginal productivity and a worker’s productivity depends on his skill and on supply and demand for that skill).

  • Nevis07

    Two thoughts:
    1) Wouldn’t a tiered minimum wage make more sense based on statistical metropolitan areas? Average wages vary quite a bit in the US with large cities having a far higher cost of living than rural areas. Past min. wage increases were something like $0.75/hr. With that type of increase, you’re not going to hurt too many jobs anywhere, but when you’re effectively doubling wages, you’re going to hurt lower cost of living locations more than higher cost of living locations because of the percentage change of that wage change. A blanket wage increase everywhere will not be felt the same around the country, in fact it seems to me it would take jobs away from the poorest regions:

    http://www.governing.com/gov-data/metro-area-wages-cost-of-living-adjusted-2014-data.html

    2) On the other hand, would could actually enforce the laws on the books and secure our borders and not keep importing immigrants that push down market wage rates…

    • Jim__L

      There’s nothing stopping cities from passing their own minimum wage / living wage laws.

      I’m still waiting to hear an explanation as to why Leftists, who dominate urban constituencies, are pushing for every law to be national. The main explanation that I can think of that fits the facts is that they just want power over everyone.

      In this specific case, it manifests by opposition to jobs migrating out of their cities to the less-expensive (sometimes, far less expensive) countryside. But that is consistent with the “power over everyone” judgement.

      As far as a constructive solution goes… I don’t know why international labor unions aren’t pushing really, really hard to go truly international. When workers abroad can fight to raise their wages to the point where they can become consumers, you’ll ever increasing demand for labor and productivity, as well as a reduced incentive for American companies to move jobs abroad.

      This was the original dream behind granting China MFN status, lo these many years ago. Why are labor unions not busting their tails to make it a reality?

      • seattleoutcast

        I also believe it has to do with power. Imagine this conversation with a Seattle leftie:

        Me: Do you think that Washington State has the right to legalize marijuana?
        SL: Of course!
        Me: So the state can rebuke federal law?
        SL: Of course!
        Me: Then Mississippi has the right to make abortion illegal, right?
        SL: Oh no they don’t!

        • f1b0nacc1

          Of course they have this problem with Sanctuary Cities, and they seem to think that isn’t an issue….
          Don’t expect consistency from a leftie….

  • ddh

    Robert Reich is arguing in effect that some economic activity is not worth having if it can only occur at a wage below $15 an hour–that is, we would be better off if the government lowered GDP and the post-tax income of the employed (because they would pay for higher welfare spending). Many Democrats, however, also argue that the existence of “jobs that Americans won’t do” at prevailing wages requires large-scale immigration, which puts downward pressure on wage rates.

    Intellectual consistency is not a highly valued virtue among the politically engaged.

  • Andrew Allison

    The proposition that society owes a basic standard of living to all citizens who work full time is ridiculous on its face. There are many jobs which are simply not worth $15/hour, either because the economic value produced is less than that or the employer can’t pay that and remain in business. As we have seen with ACA, increasing costs for employers results in decreased numbers of full-time workers. The other obvious question is, under the suggested rationale, why the hourly wage for full-time employees should be different from that for part time employees.

    • rheddles

      I think we are rich enough to provide a minimum standard of living to all citizens incapacitated by physical or mental disabilities. I do not think we are rich enough to pay able bodied people to not work, aside from the fact that it is denigrating.

      • Jim__L

        interestingly, countries that Leftists like to point to as successes, like Sweden, put primary responsibility for social support like this on families (for criminals, particularly.)

        But that would require strong families, something the Left dislikes. Divorce is to them more sacred than marriage, after all.

        • iconoclast

          Religious institutions like the Catholic church provide a lot of charity–truly means-based charity not implemented by an indifferent bureaucrat. It works much better

      • seattleoutcast

        I think you’re rich enough to give people more money through philanthropy. When you’ve used your own money first, then we can talk.

        Most leftists are generous with other people’s money.

  • rheddles

    Reich gives the game away in the first sentence: People who work full time are fulfilling their most basic social responsibility.. People have no social responsibility to work. Only someone who thought he was a master of the universe would make such a statement. People have a human need and right to participate with others and make a contribution to others for their own advantage. As some Scot said, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Reich wants to deny people whose marginal productivity is less than $15/hour the right to benefit from the property of their labor. That is wrong.

    The minimum wage is $0.00. That’s what the unemployed earn. All else they receive is charity and dehumanizing.

  • Blackbeard

    This has nothing to do with economics: It’all politics. Consider:

    1. The D’s propose a $15/hour minimum wage. Hurray they are champions of the poor!
    2. If the R’s oppose it, as they will, even better. The R’s are heartless plutocrats!
    3. If the R’s are successful in their opposition, as they will be, even better again. Vote the heartless R’s out.
    4. If somehow it passes it will increase unemployment and inequality. More good issues for the D’s to run on.

    But you say won’t the D’s be blamed when it all works out badly? Of course not, that’s the job of the MSM.

  • Leena

    why should taxpayers be subsidizing Business’s payroll who don’t pay enough to their workers?

    • iconoclast

      Society chooses to give charity to people who cannot earn enough to meet all of their needs. Society also has chosen to allow floods of illegal aliens who drive wages down as well.

  • Jacksonian_Libertarian

    During Great Depression 1.0 the government made Union laws which raised the pay and benefits of Union workers but exacerbated the suffering of all other blue collar workers with unemployment and lower wages. Here we are 7 years into “Great Depression 2.0” and the stupid government is trying to do the same thing all over again with a $15 per hour minimum wage. There aren’t enough jobs now, and job force participation is at a multi-decade low. In addition this will kill off all the entry level jobs, and increase prices across the whole economy so that $15 per hour doesn’t mean nearly as much, to those that still have a job.

  • factoidlover

    I’m with the line of reasoning that contemporary capitalism and moral reasoning are often in conflict. Sometimes it is because the economic thinking is poor. Sometimes because the moral reasoning is poor. And sometimes it’s because both are poor. This wage debate is one of the cases where both economics and moral reasoning are not particularly well developed.

    Income inequality has a detrimental effect upon the whole of a nation’s interests. Raising or lowering minimum wages has a nearly immeasurable effect upon these interests and does nothing to correct the mechanisms of continuing inequality.

  • Anthony

    The immorality of…. A cause for real income/capital/minimum wage U.S. discussion: “since the 1950s Americans living in non-metropolitan counties have had a higher rate of poverty than those living in metropolitan areas.” See: inthesetimes.com/rural-america/entry/18526/why-the-left-isn’t-talking-about-rural-poverty

    • Jim__L

      Is “poverty” in this case measured in purchasing power parity, or a simple number? In a rural area you could live very comfortably on an income that would leave you impoverished in Silicon Valley.

      • Anthony

        If you read article, you know no mention of PPP (economically speaking) inferred. But the poverty identified Res ipsa loquitur and conforms with idea of post.

  • Episteme

    In our view, the right to work—to enjoy the fruits of one’s own labor—is a core part of human dignity. A “moral” public policy would be aimed at ensuring that as many people as possible are able to find jobs. Even if those jobs pay poorly, they provide skills and experience that allow people to command higher wages in the future. And of course, there is room for programs like the Earned Income Tax Credit to enhance the income of low-wage workers and ensure that working people have some level of material security.

    I think that that’s very well put. And I say that as someone who myself makes less than $15/hr (in a white-collar job, no less). However, what I’ve ended up doing – thanks, I imagine, to being more educated in economics than most others in this range – was start from Day One to invest anything extra I had in dividend-yielding instruments and the like (since we’re in an environment where bank savings yield no interest) rather than being spent on luxuries. After more than a decade of that, I’ve been slowly moving money back and forth in accounts and using that invested income built off a low base wage to accrue the money that I’ve used toward things like supplementing rent and paying for tuition (which is hilarious when I’m in class with professors and well-paid other students who are bad-mouthing capitalism when the literal definition of capitalism has allowed me to even afford to take the class).

    We have these weird capital-labor split in our minds, as if even the least Marxist among us can’t help but use that discourse. Meanwhile, we have an economy where the wealthy don’t just sit on their butts exploiting things but work crazy hours (if anything, part of the problem in unequal income is that top-level folks have the opportunity to do a lot more paying work – in addition to being paid more for work – than those trying to dream of forty hours scheduled in a post-ACA world) while we nevertheless don’t help the lower tier properly invest money (people complain about the loss of pensions and the lack of 401(k)s, but even low-level people can put small amounts away in IRAs and dividend stocks like I’ve done and see compounding effects very quickly). I sometimes wonder if regulations such as ones that refunded brokerage fees for small investors to get people into the market would see a jump in real wealth (especially coupled with other investment-based reforms that we need but are politically less popular because they aren’t enough poor-to-middle-class folks investing). As we move further into the information age, we need to have people take control of their financial destinies and help create wealth rather than just redistribute it. Teaching labor to become small capitalists as a way to grow their wealth (and making that process easier through reforms) is a good way to do that. If I can act disciplined enough to move bits of savings into the market each month of so to put me through grad school without any loans when I get paid under $15/hr, other folks can use the same strategy to supplement the money they need for their families.

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